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Spot FX Day Trading: The Jigsaw


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Spot FX Day Trading: The Jigsaw

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  #191 (permalink)
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mokodo View Post
Hi Adamus,

Guess it's an attempted shift to start trusting my experience via subjective analysis, rather than putting the 'responsibility' on a set of mechanical rules.

All of my trading uses very systematic entry rules. To me, this is crucial because my only ability to genuinely test if I am right or wrong is to have mechanical entries - otherwise, how will I ever know if I just got lucky?

Because making money in the market is completely based on statistics, then I need accurate statistics of the probability of my entry technique working out. Therefore, no matter what, and no matter how bad I "feel" about the trade, I still take the entry if it is sets up. I have found that time and again my brain has told me not to enter the trade but my entry rules did tell me to enter the trade and I was very very happy to have done so at the end.

For me, I don't think, I just trade. The purpose of my brain is for strategy development - but then, after the strategy is developed, I stop thinking and I allow the strategy to tell me what to do.

When I feel like doing discretionary trading, then I gladly will manage my trade based on how I feel, what the market is doing, how much money I need that month, etc. But my entries are always very mechanical.

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  #192 (permalink)
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JGSmith View Post
All of my trading uses very systematic entry rules. To me, this is crucial because my only ability to genuinely test if I am right or wrong is to have mechanical entries - otherwise, how will I ever know if I just got lucky?

You trade in sim for long enough to build up a track record and that will give you the stats you need. If your subconscious is giving you poor decisions (feelings) about entries, it's because you haven't trained enough with the aim of using your subconscious. It should also be better if you stick to one market and time-frame.

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  #193 (permalink)
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mokodo View Post
When are you planning to start up your trading / journaling again?

September. I've been working on my indicators and I'm almost done now - at last - I needed to be able to jump back to old charts and have the support and resistance quickly visible, otherwise it takes too long and I don't do it, skipping out on basic research that I really have to do.

Like you I am also away for the second half of August - if I don't remember to say later, have a great time!

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  #194 (permalink)
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Another great day reviewing, and a few more notes follow. Actually glad I wasn't trading today, looks like the Euro will put in a 40 pip range, the 14 day ATR is something around 85. Would have been a challenge to squeeze much out of that. Oh those lucky cable traders.

Review notes...

Taking a step back and asking myself why am I day trading (as opposed to swing trading or other approaches). It takes a lot of time and mental energy, so I asked myself is it worth it? My answer is: only if I have a number of decent trade opportunities regardless of the type of day that gets served up. I will measure this by comparing the number of pips I achieve per day/week/month vs the range of the day/week/month. This will be a proxy for the number of tradeable swings I can exploit.

I tend to do better when I have clear goals. This amend and test phase is necessary for me now, but I want to introduce a self-competitive element to add to the interest. I like the challenge of focusing on the 'process' but I also respond well to marking myself against previous efforts. I have looked at some options and will track the following to add a bit of spice:

- Pain ratio (MFE vs MAE)
- Minimum of 2 trades a day - even a day like today in the Euro had a couple of tradeable swings, I want to push myself to be risk-seeking
- Maximum R:R trade. In the last three years the best R:R is 3.5. On a solid trend day, say 100 pips+ it will be possible to better this, so I'm looking to stretch this all time best each month, and have out there on the horizon the goal of a 10R trade.
- Accuracy % 50% or better. I have averaged less than this, around 35% historically.
- Time on the screen less than 180 minutes a day. Perhaps an odd one at first glance. Obviously you need to watch the price to get in the flow, but I find too much screen time and I lose my freshness and focus. I wish to work towards setting up my day and then attending to the charts/trades at areas of interest, in line with my game plan. After an hour of set-up, 3 hours seems a happy balance and with an hour or two post session journaling, adds up to less time than a conventional job, which means more time with my family.
- Number of full stops vs full targets

Some great traders on futures.io (formerly BMT) have the ability to reverse a position and to scale in. I will work towards incorporating these two features in my trading. To me they appear hallmarks of excellent traders.

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  #195 (permalink)
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I've made a point at the end of the day (for the last couple of months) of printing out colour charts for my trade chart (350 tick), 5 point renko, 60 min, 5 min and a 15 chart from the CME for the 6E. All these have my key indicators on them.

At the start of the next day's session I go through each and note up the PA features I look for - and compare that to my journal and what I saw in real time. The 'accuracy gap' between the two shows me where I need to get better. There are some features I get right pretty consistently and some I'm not so good at. I must admit I like getting hold of a piece of paper and pencil now and again.

Yesterday I trawled through every chart and spotted something I think I will be testing out. I am getting better at tracking the features that show signs of weakness/strength and my plan is to commit to a trade when I have a good hand. On a fair proportion of trades I have spotted the trade before - sometimes well before - the actual entry. And sometimes I would pass on the trade because the R:R was not appealing, due to price having got away.

The idea then is to make judgments balancing two factors, i) how many good cards am I holding, ii) what is the risk:reward at each moment I hold them.

In this scenario it may be that the hand is ok, and one more feature would make it great, AND the R:R at that moment is excellent. I've read some post regarding taking price or confirmation risk and I guess this what I am discussing, get in earlier with less confirmation but with a much better potential payoff.

Again the trade off is: rigidity which allows proper bench marking vs flexibility to trade more based on intuition/experience. As long as I track everything I do I am sure a balance can be struck.

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  #196 (permalink)
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Great family holiday for the last couple weeks. Have stolen a few more hours to review journals, re-read some key texts and generally clarified what I am applying myself to for the next few months.

That process has manifested itself in a few tweaks to the trading plan, routines and procedures; but really very minor changes there.

Re-read Trading In The Zone and noted it up. Struck me how little I actually took on board when I first read it (a couple of years ago). I thought I had believed and integrated those key ideas that struck me as important - but obvious to me now I have only paid lip service to the effort necessary to really 'get' an idea and work it into my own psyche.

So watched EURUSD today and will do likewise tomorrow to get back in the groove. And starting up the SIM trading for September to start a fresh batch of sample trades.

My monkey is happy and behaving well - so let's trade!

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  #197 (permalink)
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Had planned on just watching today, but I actually got through all my 'trading orientation' very quickly. It actually just took a few hours to click back into the routine.

Game plan today was to watch for a reversal or range around 1.3165. Even though there was an initial drop at the start of the London open, HTF looked tired for shorts at this point. The entry was a spring following shortening of the downward thrust, oversold in the trend channel and then the highest demand wave of the day off the lows, entry was on the no supply bar. I nailed the entry as judged by the MACD histogram. Stop was 10 pips, PT 20 pips which was inside the HOD.

Stop came to breakeven once the trade advanced 1R in my favour and then was stopped out. MFE was 13, MAE 6.

Once price broke the ice after the ISM numbers I was looking for shorts and - error no. 1 - did not take a pull back to ice set-up. I simply hesitated as the pullback showed ease of upward movement and as price got away from that entry price I did the right thing by sitting on my hands and did not chase it.

Stopped my session just after that.

Adding this to remind me what lies behind hesitation....

"Hesitating or skipping trades because I KNOW the trade will be a loser. I can not KNOW what will happen in the future, anything can happen. Let go of the trade outcome and just read and react to what is happening."

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  #198 (permalink)
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No trades for me to add to the sample pot today. Game plan was to look for longs off the range base at 1.3160-65, and after hours of slow-motion ping-pong we got a break and a nice 50 pip swing. Alas without me as I did not get a signal to take advantage of it.

There was lots of context to get long towards the end of the US open, building on top of the price action from yesterday but nearly getting a signal is not a reason to take a trade. So feels odd to say it, but well done me for not taking the trade!

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  #199 (permalink)
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A tortured first half of the session - and a good finish.

I'll preface this post with a reminder that I am in SIM for at least September with the purpose of forward testing my current trade plan/routines/set-ups etc. Some of the set-ups I've used a similar form for years and others are new. Most are based on Wyckoff/David Weis.

Game plan was to use the level from yesterday 1.3165 and the asian high 1.3220, work off those and see what happens as various news and the ECB press conference hit the wires after the US open.

Towards the end of the London open I either skipped a trade or it did not fit my rule set. That's discretionary trading! I was looking for a long after price accepted 1.3165, saw some demand and wanted in on a pull back. It came but I chose to pass as the proper place for the stop did not give me an attractive R:R. I am working towards getting my initial risk down, which means tighter stops, but have always looked for local swing high/low to tuck the stop against and it's not always the case you get both. So I am working out what is generally better - taking all trades which look good, or passing on those where a tight stop does not have PA protection. Decided to track this for the course of the SIM period to get some hard facts.

1st trade was a straight knifing. One of the (new) test set-ups is to bravely counter-trade a buy/sell climax. For now I have a simple criteria which excludes the context. I know a climax will occur at the end of a move, I just want to track the feature and see where else it occurs and how I can use it. Result -1R and my hands are cut to ribbons.

2nd trade was drop dead gorgeous. The double top of the day's high with an upthrust, a 90 pip swing, straight through the ice. Then a 3 pushes retracement back to test the breakout area, just shy of the 50% mark. I got short with a 10 pip stop as the MACD rolled over and missed the entry just by 1 pip. Took half off at +25 and the rest off at +45, for a 3R winner, with a MAE of 3 pips. Oh if they could all be like that...

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  #200 (permalink)
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Welcome back. Where did you go on holiday then?


mokodo View Post
Adding this to remind me what lies behind hesitation....

"Hesitating or skipping trades because I KNOW the trade will be a loser. I can not KNOW what will happen in the future, anything can happen. Let go of the trade outcome and just read and react to what is happening."

Just my 2 Euro cents but hesitation for me is 99% wanting a certain outcome rather than considering the loss. Of course I fear the loss as much as anyone but I am hesitant because my read of the PA is poor. For a while I decided to go with the hesitation and not count it as an error, and I had one period of 2 weeks or so with only 1 or 0 trades per day, instead of 4, and they were all winners. Obviously that's a small sample size but I keep thinking about it. I gave up on this low volume trading approach because I wasn't satisfied with the no-trade days.

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